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How to pay a real estate closer hourly plus commission

Paying a real estate closer a combination of hourly wages and commissions can help stabilize their income while still incentivizing performance. This structure aims to balance immediate compensation for their time spent with rewards for successful deal closures.

October 22, 2026 · 3 min read

Why combine hourly and commission?

Combining an hourly wage with a commission structure offers a closer a safety net, reducing the pressure to close every deal at any cost. This can lead to more ethical and sustainable negotiations, as he or she is not solely reliant on the commission check. It also helps attract experienced closers who might hesitate to work purely on commission without a base income.

For you as the investor, it means you can demand consistent effort on all leads, even those that require extensive follow-up but might not close quickly. You are paying for their time and expertise, not just for the final signature.

Setting the hourly rate

The hourly rate should reflect the closer's experience level and the local market rate for similar sales or acquisition roles. It needs to be competitive enough to attract talent but not so high that it negates the incentive of the commission. You are paying for their time on the phone, administrative tasks, and follow-up activities.

Clearly define what activities are covered by the hourly wage. Is it only call time, or does it include CRM updates, contract preparation, and other due diligence? Specificity here prevents confusion and ensures proper tracking of their work hours.

Structuring the commission payout

Commission can be structured in various ways. A common method is a percentage of the assignment fee or profit on a wholesale deal, or a flat fee per closed deal. The percentage might be tiered, increasing as the closer hits certain monthly or quarterly volume targets.

Make sure the commission structure is simple and easy for the closer to understand and track. Complex calculations can demotivate and lead to distrust. Transparency in how commissions are calculated and paid is key to a good working relationship.

Defining performance metrics for commission

While the ultimate metric is a closed deal, you can tie commission to other performance indicators. These might include the number of qualified offers made, the number of contracts signed, or the total gross profit generated. Consider what behaviors you want to incentivize beyond just closing.

For instance, a bonus could be offered for deals that close faster than average, or for deals that require less of your direct involvement. Clearly define these metrics upfront so the closer knows exactly what he or she needs to do to maximize earnings.

Legal and compliance considerations for payroll

When paying an hourly wage, you typically classify the closer as an employee, not an independent contractor. This comes with obligations like payroll taxes, workers' compensation, and adherence to minimum wage and overtime laws. This is not legal advice, so you should consult with a payroll specialist or attorney.

Ensure your employment contracts clearly outline the compensation structure, including hourly rate, commission terms, and any other benefits. Clear documentation protects both you and your closer.

Reviewing and adjusting the compensation plan

The real estate market and your business needs can change, so periodically review your compensation plan. After six months or a year, assess if the hourly rate is still competitive, if the commission structure is motivating, and if it aligns with your profitability goals.

Be open to feedback from your closers. He or she is on the front lines and can offer valuable insights into what works and what does not. Adjustments should be communicated clearly and transparently to maintain trust.

Questions people ask

Does this compensation model work for new closers?

Yes, combining hourly pay with commission can be particularly effective for new closers. It provides a stable base income while they learn, reducing financial pressure and allowing them to focus on skill development.

How often should I pay commissions?

Commissions are typically paid out after the deal funds. You can choose to pay them weekly, bi-weekly, or monthly, depending on your company's cash flow and preference, but always after the deal officially closes.

What if a deal falls through after I paid an hourly wage for work on it?

The hourly wage compensates your closer for his or her time and effort, regardless of the deal's outcome. If a deal falls through, the hourly pay is still earned, but no commission would be paid since the deal did not close.